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Monthly report September 2021 - NFF

The NAV rate in September was 105.10, which gives an increase for the month of 0.54 (0.52%). It is a perfectly ok month, the fund rates according to plan.
It was a 30 day month so that makes a couple of base points on NAV. Inflow of SEK 44 million, thank you very much for that.
New lending in February was approximately SEK 150 million. We continue our work with extra frequent follow-up of our companies with regard to the Corona situation. Maybe it's time to redefine this sentence?
We have a methodology with more frequent follow-up that we implemented in connection with Covid and we will continue with it, also post Covid.

The market
We experienced unrest in the world's stock markets during September.
Driven by concerns about future inflation and thus rising bond yields. Furthermore, the Fed is primarily talking about reducing support purchases of bonds and future interest rate increases.
Evergrande the Chinese real estate company is also creating global unrest. The government learned an expensive lesson in connection with Lehman and I do not think the Chinese state will let the company go under completely. However, it will sting and sting in some portfolios before the smoke subsides. The price of Evergrande's bonds has fallen to bankruptcy status. The bond market expects a default and that the assets are worth about 25% in a bankruptcy today (see graph below). The Chinese government has tightened lending for a few years and now we see very clearly what can happen when highly leveraged companies do not get cheap loans anymore.
Can it happen in Sweden?

Evergrande
Bloomberg

In the graph below, you see the expected P / E ratio, the S&P 500 actual price and expected earnings per share in the S&P 500.
As you can see, we are at levels that we last saw in connection with the IT crash in 2000. It is then perhaps not so strange that a certain correction takes place. We will only know afterwards how deep and long it will be. However, it is very much in the hands of how the central banks handle their monetary policy, support purchases of bonds and the rhetoric regarding inflation.

S&P500
Bloomberg

Below you can see how the fund is invested. Even if the picture is a couple of months old, the distribution is the same, so it illustrates the distribution well.

NFF Portfolio Juli 2021
NFF Portfolio July 2021

We have introduced quarterly liquidity in the redemption fund on 2021-07-01, we retain monthly opportunities for investments. Redemption must be announced at least 90 days before redemption.
We continue our work with extra frequent follow-up of our companies with regard to the Corona situation.
In 2020, Finserve Nordic, which is the fund's AIF manager, joined the company to the PRI network, Principles for Responsible Investment. The network is independent but supported by the UN and encourages investors to make responsible investments by following the principles developed by the network.

Finserve Nordic believes that the integration of sustainability risks is an important part of the funds' investment processes. Sustainability risks are defined as environmental, social, or corporate governance-related circumstances that could have a significant negative impact on the value of investments.
Social aspects include e.g. human rights, labor rights and equal treatment. Environmental aspects are e.g. the companies' impact on the environment and climate. Corporate governance aspects are e.g. anti-corruption, shareholder rights and business ethics
All funds under Finserve's management follow the responsible investment process that is formalized in Finserve's Policy for Integrating Sustainability Risks. The policy is available on the company's website https: // finserve.se/vikten-information/. Each fund's sustainability policy is available on the funds' websites.

The fund's AUM is smaller than the approved limits of approximately SEK 1.5 billion. This compilation does not come directly from the system without a lot of hand-laying so it will not be included every month. It will be interspersed with the usual compilation.
(the fund uses its opportunity for borrowing, hence the positive and negative allocation figures)
When you make your analysis of the fund, you should mainly look at the credit risk and liquidity risk in the fund. Are you comfortable with the credit risk generated by the fund's holdings? Furthermore, the assets are illiquid and it can take some time to get their investment back if many want to withdraw invested funds at the same time. The fund has a low market risk and has a low correlation with other asset classes.
We emphasize that we are not stressed by non-lending funds, but continue to work based on our models for credit assessment, all to ensure a good diversification of the portfolio in relation to the credit risk we take.
If you need to sell your holdings, do so in the primary market where you get the best price.
If you are in a hurry to sell, the secondary market may be an option. The official NAV price is published on the first banking day each month, what is shown during the month on NGM is not, I do not want to emphasize the official NAV price, as it may have been converted fund units in the secondary market to a different price than official NAV.

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Emma Westerberg

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